But Sanlu had begun receiving customer complaints as early as March that babies' urine was discoloured and that some had been admitted to hospital.

Farmers or dealers supplying milk to Sanlu are suspected of diluting it with water and then adding the melamine – a chemical used in plastics, fertilisers and cleaning products - to make the milk's protein level appear higher than it actually was.

Melamine was linked to deaths and illness of thousands of cats and dogs in the US last year after it was added to pet food exported from China.

On Monday the China Daily newspaper quoted Li Changjiang, head of China's General Administration for Quality Supervision, Inspection and Quarantine, as saying a nationwide inspection would cover the country's 175 baby milk food factories, with results of the checks expected to be released in days.

Chinese authorities have arrested 19 people so far and officials in Taiwan have sealed all Sanlu milk powder products that have yet to be distributed to retailers.

The incident is not the first in China. In 2004, at least 13 babies in the eastern province of Anhui died of malnutrition after drinking fake milk powder that investigators found had no nutritional value.

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